Question 1. (Cash conversion cycle) Auburn Hair Products has an inventory turnover of six times per year, a receivables turnover of 10 times, and a payables turnover of 12 times. What are Auburn Hair's inventory conversion period, receivables collection period, and payables deferral period? What is the cash conversion cycle?
Question 2. (Cash conversion cycle) Dennis Lasser has collected some information about a food wholesaler in order to estimate its cash conversion cycle. The accumulated information is given. What will Dennis find the cash conversion cycle to be?
Inventory turnover = 10x Inventory conversion period = 365/10 = 36.5 days
Receivables turnover = 20x Receivables collection period = 365/20 = 18.25 days
Payables turnover = 25x Payables deferral period = 365/25 = 14.6 days
Question 3. (Cash conversion cycle) Brooks Toy Company has an inventory turnover of 12 times per year, a receivables turnover of 20 times, and a payables turnover of 25 times. What are Brooks' inventory conversion period, receivables collection period, and payables deferral period? What is the cash conversion cycle?